Bitcoin
Rising Treasury yields create headwind for Bitcoin and crypto assets
As U.S. bond yields climb to levels unseen since 2007, capital is draining from cryptocurrency markets toward safer assets, threatening further downside for Bitcoin and altcoins.
The crypto market faces mounting pressure as total digital asset capitalization hovers near $2.17 trillion, struggling to find support. The culprit, according to analyst Benjamin Cowen, is a structural shift in U.S. Treasury yields. The 30-year bond yield crossed 5.28% on 31 July, marking one of its highest levels since 2007, and Cowen expects the 10-year yield to reclaim 5% in the near term.
Cowen points out that falling interest rates do not automatically lower Treasury yields. The Federal Reserve cut rates from 5.5% to 3.75% between 2024 and 2025, yet the 30-year yield remains higher today than when rates stood at 5.5%. He attributes this to the Fed cutting rates too early, and expects pressure on the long end of the curve to persist.
Once Treasury yields hold above 5%, the Fed faces pressure to raise rates and tighten capital flow into risk assets. Since cryptocurrencies are broadly classed as risk assets, higher borrowing costs push investors toward stable alternatives. This rotation toward safety already materialised on Friday, when U.S.-listed crypto products recorded sharp outflows. Bitcoin saw $265.37 million withdrawn, while Hyperliquid lost $1.83 million. Ethereum and XRP saw thinner outflows of $9.03 million and $7.69 million respectively.
A steeper rate hike would extend bear market conditions and further restrict capital flowing into the sector.
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